Syrian step to activate banking sector's role
Syria, Economics, 5/26/2003

In the context of economic developments taking place in Syria, and the elimination of obstacles before the flow of local, Arab and international investments into the country, Damascus has recently announced approval of three private banks to work inside the country, in a step which is considered the first of its kind in 40 years.

Last week the Syrian Cabinet approved applications to found the housing and finance bank to found a bank in the name of the International Bank for Trade and Fnance, for the Bank of Lebanon to found a bank under the name of Syria and al-Mahjar. and an application by the European bank for the Middle East to found a bank under the name of the Saudi- French bank.

The Syrian minister of the Economy and foreign trade Ghassan Rifaee considered that the launching of both the private and public banking activity in Syria on solid and true basis is the cornerstone in the pan economic reform process, led by the Syrian government. He indicated that establishing private banks together with modernizing and developing the public banks will help Syria to achieve a sustainable growth because this will be conducive to allocate necessary resources for all sectors of production, according to their needs and capabilities.

The approval of the private banks coincided with the first meeting held by the monetary and loans council after President Bashar al-Assad decreed to nominate members of this council and to be chaired by the governor of the central Bank of Syria Bashar Kabbara.

The new law defined the tasks of the monetary and loans council to drawing monetary policies in Syria and to tun them, according to the state's general strategy and the needs of the national economy. These include policies pertinent to the stability of prices and the monetary purchase force, bank savings, exchange rate and organizing monetary and loans institutions in the country.

Al-Rifaee also considered that approving licenses for founding private banks in the country requires acceleration of the process of economic reforms, renovation of laws and regulations and improving the monetary policies; backing public banks and improving their performances in order to enable them to deal with changes taking place in methods of banking work and their technologies to meet the challenge of competition coming with the introduction of the new banks.

The minister indicated that there are two other applications for the Arab- Jordanian Bank and the Syrian- Bahraini Bank which will be licensed after necessary measures are completed.

The minister called for meeting the obligations towards the requirements of the free Arab trade zone and the Syrian- European Association agreement especially to the issue of liberalizing services.

The capital of the Syria and al-Mahjar Bank is estimated at 1.5 billion Syrian pounds ( USD 30 million), divided into USD 3 million for shareholders with USD 10 for each share. It is a joint venture by the Lebanon and al-Mahjar bank at 39% and the International Funding establishment of 10% and a group of Syrian businessmen at 22%.

However, the Saudi - French Bank which is of a capital of USD 30 millions is jointly run by the Saudi- French Bank at 27%, the European bank for the Middle East at 22%, while the contribution of the Syrian businessmen is at 3%.

The "International bank for trade and financing" has capital of USD 30 million. It is owned by the Housing Bank for trade and finance at 49%, and a group of Syrian partners at 2%.

Syrian economists expect that the new banks will be permitted to work in Syria as a main center of attraction for national and foreign financial resources to establish developmental and investment projects. They also expect that this will contribute to bring back Syrian assets abroad estimated between USD 80- to 120 billion.

At the meantime, the Syrian government is studying the possibility of reactivating the interest price to making it more compatible to enforced rules and regulations in neighboring states.

When President Bashar al-Assad assumed presidency on 17.7. 2000, he defined the main and future lines for the march of economic and social development in Syria, its needs and requirements in order to cope with developments and changes taking place in the world in all walks of Life. The President called for the development of the economy, for renovation of laws, elimination of bearucratic obstacles impeding the flow of internal and external investments and investing the private and public capitals and availing it the chance for competition.

On the ground of these basics advocated by the President, the Syrian leadership recommended in the year 2000 to establish private banks in the country and a banknote market. The draft law of the private banks was defined at USD 30 million as the lowest rate for the capital of any bank on the ground to be owned by Syrians with the exception of public sector' shares.

Worthy mentioning that the banking system in Syria is composed of the Syrian Central Bank and five specialized banks all owned by the government in addition to two financing establishment which are the general establishment for funding and the Syrian general establishment for insurance. The public sector's loans constitute almost 69% of the total submitted banking loans, while the private sector financing constitutes 31 %. The trade sector occupied 70% of the banks specialized investments while the other 30% goes to agriculture and to Real estate loans.

Previous Stories:
  EU- Syrian banking cooperation Miro meeting   (5/24/2003)
  Transparency: foundation for proper economy   (5/17/2003)
  Syria licenses five private banks; two Lebanese   (12/24/2002)
  Syria to license bank accounts in hard currency   (5/24/2002)
  Damascus: Banking laws and the bourse in the beginning of March   (2/16/2001)

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